Buy when the going gets tough, not when the going gets tough
Technical form
As the price rises, there will be a distance between the price and the moving average. When the distance is larger, it means that the short-term increase is too large and it is not suitable to buy. At this time, you should wait for the stock price to fall back to the rising support line of the band and confirm that the support is effective before buying.
Technical meaning
If the short-term increase is too large, it means that the bullish force is released in a concentrated manner in the short term. At this time, it is necessary to accumulate momentum and consolidate to accumulate upward force again. At the same time, short-term profit chips need a process of cashing out. In this process, buying in too early is likely to fall into the trap of the main force and thus face the risk of being locked up.
Application Tips
When the price falls back to the rising support line, it is the buying point when it starts to rise again.
For a large rising band, by observing the support it receives during its operation, especially finding a moving average that can withstand the test of decline and enable the price to rebound and create a new high, this moving average is called the band rising support line. Finding a band rising support moving average is far more effective and effective than the rising trend line.
The band rising support line is more in line with the actual situation of the specific price and has more personality. The angle and strength of the band operation are different between different coins, so different coins are suitable for different band rising support lines, rather than a fixed moving average.
How to find the rising support line of the band? The principles are as follows
1. Before the band rises, the 10-day moving average will be used as the basis.
2. Find the moving average that is supported during the first strong decline in the upward wave.
3. Verify the support strength and effectiveness of the moving average found in step 2.
4. During the rising process of the band, continuously correct and select the moving average in a timely manner.
The short-term moving average is mainly used as the rising support line of the band at the end of the band market; the effectiveness of the medium-term moving average as the rising support line and the falling assist line of the band is greatly reduced, and it is not recommended to use it. It is mainly used in the early stage.
The rising support line of a band is most practical at the end of a market trend. It is used to determine whether the band trend has ended earlier than the trend line, and it is more practical to use.
First of all, from the perspective of market cost, the moving average can better reflect the changes in average cost, and is more intuitive and effective than the trend line in reflecting the cost.
Secondly, compared with the selection of moving averages, the selection of trend lines is more difficult. The selection of moving averages only requires observation and verification of the validity of a certain moving average.
Finally, the effectiveness principle of the rising support line of the band is the same as that of the trend line; the more points on the line, the more accurate it is, and the greater the distance between the two points, the more reliable it is.
Note⚠️When using the rising support line of the band as a buying point, it is best to refer to other technical indicators as a resonance buying point.
Pay special attention to the changing pattern of volume during the process of price falling after rising. The volume must be large when rising and small when falling. A small volume when rising will not be sustainable, while a large volume when falling is most likely the main force is selling.
Don't be too anxious when intervening. You can only intervene after confirming an upward breakthrough, otherwise you may easily fall into a trap and get caught.
